The Net Zero Asset Managers initiative (NZAM), a global coalition aiming to align the asset management industry with net zero climate goals, has paused its activities for review.

This decision, coming shortly after BlackRock and several U.S. banks exited, might feel like a setback for collective action. However, this moment marks an opportunity for asset managers to take charge of their climate strategies, innovate, and push forward independently.

What does the NZAM initiative review mean for asset managers?

The suspension of NZAM doesn’t mean net zero ambitions are over. Key tools like the Net Zero Investment Framework 2.0 remain widely used, helping firms align with the Paris Agreement and continue decarbonisation efforts independently.

While the NZAM suspension may seem like a roadblock, the movement toward sustainable finance remains strong. Many of the initiative’s contributions—such as advancements in climate disclosures, target-setting, and transition planning—have empowered asset managers to act independently. These tools and principles will continue to shape the industry, even without a collective framework.

Other coalitions, like the Net Zero Asset Owners Alliance, remain strong and continue to attract major players, showing the resilience of sustainable finance.

For small to medium-sized asset managers, the NZAM pause offers an opportunity to lead on sustainability by launching independent initiatives, forging partnerships, and prioritising transparent reporting. Clients are paying attention—approximately half of the world’s investors either have or are making commitments to reach net zero by 2050.

What asset managers should do next

Here’s how asset managers can keep the momentum going despite NZAM’s pause, and take this as an opportunity:

Leverage proven frameworks: Tools like the Net Zero Investment Framework 2.0 and other science-based initiatives such as the SBTi and the ICVCM’s Core Carbon Principles remain valuable for aligning portfolios with net zero goals.
Focus on transparency: Clear and consistent reporting on emissions reductions, climate targets, and transition plans will strengthen trust and demonstrate commitment.
Invest in clean energy: With $2 trillion invested in clean energy projects last year—and a need for much more—asset managers can play a pivotal role in scaling the energy transition, particularly in developing countries.
Collaborate creatively: While NZAM may be paused, collaboration isn’t. Partnering with like-minded clients and peers such as startups and policymakers can drive innovation and shared progress.
Stay adaptable: As regulations evolve, asset managers who stay informed and agile will lead the way, positioning themselves as forward-thinking industry leaders.

Navigating challenges: The complexity of compliance

Something to keep in mind is the regulatory landscape which has grown increasingly complex, particularly in regions such as the U.S. where climate action faces political scrutiny.

Whilst there are no specific climate regulations for asset managers per se, the Corporate Sustainability Reporting Directive (CSRD), which came into effect in 2023, will affect all companies operating in the EU, including requirements to align with the EU’s climate goals. How the CSRD will affect companies such as asset managers will play out this year.

Asset managers should use this calm-before-the-storm-moment to refine their internal processes, create custom and bold climate strategies, and by doing so, strengthen their engagement with clients.

How carbon removal can play a crucial role in asset managers’ climate goals

Carbon removal (CDR) solutions play a vital role in helping asset managers achieve their climate objectives. While reducing emissions remains the top priority, balancing portfolios often requires addressing residual emissions that cannot be eliminated immediately.

For example, emissions from Group or Head Office activities, like travel, are hard to reduce. Here, CDR can complement reduction efforts. Similarly, Scope 3 emissions, such as 'financed emissions' from portfolio companies or customers, are also challenging to cut, making CDR an effective solution.

CDR provides a scalable, science-backed approach to meeting climate goals. Investing in carbon projects also provides opportunities to:

Support innovation in scalable climate solutions
Build trust with clients by delivering verified climate impact
Align portfolios with the growing demand for tangible emissions reductions

Turning challenge into opportunity

The current review of NZAM is not a signal to step back from climate action—it’s a chance to reimagine it. The continued focus of asset owners on climate concerns is a reminder that net zero is not just a moral imperative—it’s an economic one. Climate risks are financial risks, and addressing them is critical for safeguarding long-term returns.

Sustainability is no longer optional. It’s a core part of responsible investing and a critical driver of long-term success. By defining climate goals and integrating carbon removal into their climate strategies, asset managers can take a leadership role in addressing emissions that are difficult to eliminate.

Ready to reach net zero?

Opna is here to help. We partner with companies to build their net zero strategy as well as sourcing and procuring carbon removal for them which fits their requirements and budget. Contact us today to learn how Opna can support your sustainability journey.